July 14, 2010 / 6:10 PM / 7 years ago

Ritchie Bros shares fall on fears of outlook cut

BANGALORE, July 14 (Reuters) - Ritchie Bros Auctioneers Inc's (RBA.TO) shares fell 12 percent to their lowest in a year on what analysts said were fears of a cut in the Canadian industrial auctioneer's 2010 outlook for gross auction proceeds.

Ritchie Bros spooked investors after it unexpectedly said it would hold a conference call late Thursday to give an update on its gross auction proceeds (GAP) performance for the second quarter and its view for the rest of 2010.

"Investors are thinking that the guidance for the year was too aggressive and this just has to come down," Gary Prestopino of Barrington Research Associates said.

In May, Ritchie Bros -- which sells trucks and other equipment used in the construction, transportation, agricultural, mining, marine industries -- forecast 2010 GAP of $3.9 billion.

Analysts said the company may be forced to cut its outlook for 2010 GAP as the U.S. construction markets were still very sluggish.

Raymond James analyst Ben Cherniavsky said, "We have advised investors not to buy the stock until the market digests such news and the share price pulls back further."

For the first quarter ended March 31, GAP for the company, which conducts auctions in North and Central America, Europe and the Middle East, fell 3 percent to $776.7 million. [ID:nCNW5B17r4]

"The company has been saying its GAP is going to start increasing in the back half of the year, but for that to happen, it would have to make assumptions of some very strong economic recovery in the U.S., which does not look like happening any time soon," Barrington's Prestopino said.

Major projects, where there is a need for heavy-duty equipment, are also not taking off in a big way, Prestopino added. He has a "market perform" rating on the stock.

Some analysts also see the company facing new competitive pressure in the United States from IronPlanet, an online used-equipment auctioneer.

Shares of Ritchie Bros were down C$1.95 at C$19.36 Wednesday afternoon on the Toronto Stock Exchange. They touched a low of C$18.80 earlier in the session. (Reporting by Bhaswati Mukhopadhyay in Bangalore; Editing by Aradhana Aravindan)

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